no character

Source: The Hitavada      Date: 20 Feb 2018 11:29:50


EXASPERATED by the scandals that are coming out of the banking sector, the Government has now begun wondering if there is a massive failure of supervisory mechanism in banks particularly in public sector. In the Nirav Modi and Mehul Choksi fraud case, some arrested officials of the Punjab National Bank (PNB) have confessed that every time they received a request for a Letter Of Undertaking (LoU) from the two customers, they got hefty packets of bribe, obliging them to ensure that the request is granted post-haste. This might have led the Government -- and particularly the Reserve Bank of India (RBI) -- to believe that the banks lacked terribly in supervisory control.

Yet, absence of supervisory mechanism to ensure that all regulations are followed to the hilt, may be only one of the superficial answers related to structural systems in Public Sector Banks (PSBs). The more critical issue relates to absence of character of the people in the PSBs and the integrity of the overall banking system. These may appear to some as soft issues for which there may not be any concrete solutions. Yet, a deeper thought would lead one to thinking that the biggest malaise that has afflicted the Indian economy for decades is absence of character that has led to massive corruption at all places including the political, the administrative, the economic components of the overall system. Therefore, the Government will have to find an answer to this issue on a priority basis.

What should follow on an immediate basis is initiation of a cleansing process aimed at not just throwing out the corrupt people but also at ensuring that right people are appointed at right places. For, every system is as good -- or as bad -- as the people who man it. Indian banking sector has been afflicted for decades by a massive absence of character. In public sector banking, there are people in high places all willing to ‘accommodate’ every request that does not match the norms. These people seem to be all willing to bow to political pressure for reasons known only to everybody.
Against this background, therefore, it is necessary for the Government to start infusing a strong element of character in public sector banking. And to begin with, it will have to examine if this absence of character is an outcome of the Yatha Raja Tatha Praja (People are what the Kings Are) syndrome. For, the issue is multi-dimensional, to say the least. It has brought a lot of bad taste to everybody’s mouth over time.

The fact that our banking system easily allows massive frauds to take place in the form of Ramalinga Raju, Vijay Mallaya, Lalit Modi, Nirav Modi, Mehul Choksi means there is an absence of character at various levels. The banking system is also bogged down by massive Non-Performing Assets (NPAs) whose actual value is yet to be calibrated. Of course, for the past sometime, the Government is struggling to set things right and those effort will certainly bear right kind of fruits. But much of that endeavour will have to be focused on the issue of infusing character in the banking system.

This problem may even be found in private banks as well. Yet, given their constraints of producing results, the private sector banks must be following norms more honestly in sync with their respective policies. That commitment to the ultimate purpose of banking must be introduced in PSBs also in a no nonsense manner. In still other words, the general Indian belief that business cannot be done without badmashi (bad character) will have to be eliminated with much effort. That is an absurd and perverse thought that must be fought back and defeated. This should be the Government’s goal now.